The Federal Housing Finance Agency (FHFA) announced that Fannie Mae and Freddie Mac will implement a new refinance offering aimed at borrowers with high loan-to-value (LTV) ratios. The HARP program, or Home Affordable Refinance Program, which was set to expire in December of 2016 is being extended. Since the new high LTV streamlined refinance offering will not be available to borrowers until October 2017, the FHFA said it “created a bridge” to ensure that high LTV borrowers who are eligible for HARP will not be without a refinance option.
Currently, the FHFA estimates there are over 300,000 U.S. homeowners that could still refinance through HARP.
Who is Eligible?
In order to qualify, borrowers must not have missed any mortgage payments in the previous six months and must not have missed more than one payment in the previous 12 months. Also, borrowers must have a source of income and they must receive a benefit from the refinance such as a reduction in their monthly mortgage payment. Full details will be available in the coming months, but the offering will make use of the lessons learned from the Home Affordable Refinance Program (HARP) and its streamlined approach to refinancing.
What is the new program?
The new high LTV streamlined refinance offering is more targeted than HARP but as with HARP, eligible borrowers are not subject to a minimum credit score, there is no maximum debt-to-income ratio (dti) or maximum LTV, and an appraisal may not be required. However, unlike HARP, there are no eligibility cut-off dates, and borrowers will be able to use it more than once to refinance their mortgage. Borrowers with existing HARP loans are not eligible for the new offering unless they have refinanced out of HARP using one of Fannie or Freddie’s traditional refinance products.
HARP continues to be one of the most successful crisis-era programs with more than 3.4 million homeowners already having refinanced their mortgage. More than 300,000 U.S. homeowners could still refinance through HARP, potentially saving money by refinancing into a current market interest rate.